Why mobile marketers need to start measuring ROI right now

When apps exploded into our lives almost a decade ago, and mobile marketing was in its infancy, the install was the KPI and marketers were measured by the scale of new users they delivered. However, now over 4 million apps are available, and retention rates are suffering. In today’s freemium-driven app economy, most apps make their money from in-app purchases and advertising, and without continuous engagement, monetization has become difficult.

As important as installs are, marketers are waking up to the fact that a download is merely a stage in the funnel, and it cannot guarantee a healthy revenue stream on its own. If users download apps, but then stop using or uninstall them, marketers get nothing.

It’s the bottom line that counts, so marketers need to start measuring the ROI of their mobile activities. So how is it that 67 percent aren’t measuring the ROI of their mobile activities?

AOL’s chief mobile officer, Mark Connon, said it best in Street Fight:

One of the biggest myths in mobile advertising is the perceived lack of data around in-app measurement. This is a misperception, but a growing number of marketers cite attribution transparency as mobile’s biggest challenge. The misunderstanding is born out of the industry’s reliance on cookies. Obviously, mobile is a cookie-less channel. But mobile’s measurement capabilities are as good and possibly even better than those for desktop.

2017, I believe, is when it will all change and mobile marketers everywhere will start to measure their ROI. Quite simply, they will have to. Here’s why this is will be The Year of Mobile ROI Measurement.

The organic decline

The organic multiplier — the number of organic installs a marketer could expect to get from one paid install — is nowhere near what it used to be.

With organic app discovery largely broken, we often hear that organic multiplier ratios took a dive, anywhere from around 1:1.5 to 1:0.2–0.5. That said, organic downloads are still an absolute must for marketers who need every fraction of quality organic users to maximize overall revenue.

Easier-to-measure app revenue

Tracking a wide range of revenue events to calculate an average app user’s lifetime value (LTV) is now standard practice, with incoming revenue centered on two main pillars:

In-app purchases: Marketers can enrich their data by adding multiple parameters to a standard revenue event that will tell not only when a purchase has been made, but also by which type of user, what is being bought, for how much and more. This data is extremely valuable for optimization through smarter acquisition, more granular segmentation and sharper targeting (including personalized retargeting and lookalike targeting).

In-app advertising: Most ad revenue reporting is offered on an aggregated level only, with breakdown by geography and date. That leaves app developers uninformed, since they don’t have data sliced by acquisition source. And without user-level data, an app developer won’t be able properly to measure ROI. By connecting attribution data to ad monetization, marketers can pinpoint specific acquisition sources and measure LTV that incorporates revenue from in-app ads — a rapidly growing stream of income. This enables UA (user acquisition) managers to optimize their campaigns based on accurate ROI figures.

Rising media costs

In the past, the main objective of paid installs was to increase the number of organic installs through improved app store rankings. Today, these tactics are no longer effective, as store algorithms place more weight on quality factors like ratings, reviews, usage and uninstalls. That means that amid the organic decline, marketers have to acquire more quality users.

But with heightened demand come higher media costs, making it a tough undertaking — and in-depth measurement is imperative. Marketers should not settle for getting cost data per campaign; instead, they should ensure they get access to cost data by ad group, creative variation, and by geo and publisher.

Moving beyond last-click attribution

The understanding that last-click attribution is flawed has led to the development of more sophisticated attribution mechanisms that incorporate multiple touch points.

Like desktop, mobile now embraces multi-touch attribution, so marketers can gain valuable data telling them not only which media source a user last interacted with before an install, but also which sources assisted in leading users down the funnel.

This information gives marketers a more accurate picture of the value and return each source delivers. To catch up with desktop attribution, fractional attribution is the next big thing for mobile.

The real challenge in today’s marketing space is actually omnichannel and cross-device tracking. It’s unlikely that we’ll get near the Holy Grail of a 360-degree view of consumer behavior, but more dots are being connected all the time — especially between the key offline and online routes.

Better fraud protection

Bad actors are following the money that’s currently pouring into the channel, and mobile ad fraud is a growing concern. The fortunate consequence is that the good guys are investing more in developing effective defense mechanisms.